Tuesday, July 13, 2010

THROWING OUT THE BABY AND BATH WATER

The public lynching of National Social Security Fund officials over the purchase of land in Temangalo, should have clinched the argument for an immediate and urgent liberalization of the social security sector.
To recap.
In March this year NSSF bought about 463 acres in Temangalo outside Kampala from Amos Nzeyi and Amer Ltd – a company in which security minister Amama Mbabazi has an interest.
NSSF plans to use the land to develop 5,000 housing units, which low income workers can acquire by contracting mortgages.
MPs have taken a particular interest in the deal ostensibly because the price was much higher than that quoted by three independent valuers. Because Mbabazi was involved they charge that he must have used his influence to first have NSSF buy his land and secondly, to buy it at what they judge an inflated price.
Judging by accounts of the proceedings MPs smell a rat and any effort to explain the investment process surrounding the deal is swatted away like a fly off a beer mug. This is an inquisition. Whichever way you look at it this is not a fair hearing in any shape, form or size.
But that is a discussion for another day.
As a fully paid up member of NSSF I am an interested party in how the fund is run.
I understand that the piles of money NSSF is custodian of, need to be deployed to guarantee me a return above inflation – now at 15.6%, as they have promised.
I understand that the faster this money is deployed with diligence and prudence the better for my retirement.
I also understand that my contributions to NSSF can be a force for transformation in this country if deployed in alleviating our infrastructure bottlenecks, housing being one of them.
I have to admit that I am not privy to the finer details, a blow-by-blow account of how the Temangalo deal came about – and I have waited two weeks for damning proof of outright corruption or evidence that may stand up in a court of law to suggest that there was wrong doing and have found none.
That the land was overvalued? The market in fact suggests otherwise, with evidence of higher prices for similar land in the same area adduced.
That the NSSF board was out of order to suggest Nzeyi assume powers of attorney over Mbabazi’s land? That was within the board’s mandate in order to shield itself from any the potential conflict of interest that may arise.
That NSSF bought 50 acres of ghost land? NSSF verified independently that the land they were being sold was 463 acres and not 490 acres as the land titles indicated – not an unusual occurrence as anyone who may have bought land would know, and it is for this 463 acres that they paid sh24m an acre.
As a paid up member of the Fund I can not help feeling that the MPs – who do not contribute to NSSF, are weeping louder than the bereaved.
However my concern is that a real estate development that will begin the task of addressing the housing shortage in Kampala and transform the population around Temangole will end up dead, like a baby thrown out with the bath water, sacrificed in the arena of political contest.
I over exaggerate?
In 1997 government sought to sell a 49% share in Coffee Marketing Board. The net asset value of the company was about sh25b or about $17m dollars at the time. Since the coffee sector had been liberalized and CMB had lost its monopoly position the key asset was the 4 million bag a year coffee processing plant. When the bids were open the highest of the two biddersm, Sucafina from Switzerland offered $8m. But there was a public uproar spearheaded by parliament and the sale was retendered. Sucafina was the only bidder this time around and much the wiser halved their price, offering $4m. Subsequent negotiations came to nought and God knows what happened to the plant.
Our development needs are urgent. Twenty years of donor dependency has barely moved the needle on our drive towards a better living for our people.
NSSF which controls most of our national savings has the potential to be a vehicle through which development can be fostered.
Parliament should exercise oversight over NSSF’s operations but not to the point that it is so stifling. In fact parliament should urge that the social sector reform bill come to them expediently, where regulatory powers will be better spelt out and will require a systematic investment plan of all players, an easier arrangement to oversee.
Otherwise like past managements, Jamwa & co will retreat into a shell opting to invest in only safer, lower yielding treasury bills and bonds and revert to the days of 4% interest on my savings.

Published in September 2008, New Vision

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